55th ANNUAL GENERAL MEETING - BUSINESS UPDATE
Murray & Roberts has adopted a cautious but still positive outlook for the
financial year to 30 June 2004. The global economy remains relatively depressed
and major capital investors in the domestic economy await clarity from pending
legislation in the mining sector and seek confidence in the direction of the SA
Rand.
Considering the relative strength of the SA Rand, the Group has recast its
budget projections at an average exchange rate of 7,25 to the US Dollar for the
halfyear to 31 December 2003 and 7,50 to the US Dollar for the full-year to 30
June 2004. This is a reduction of 28% and 19% respectively against the previous
corresponding periods and will have an impact on the financial performance of
the Group.
Order books in the Group"s mining and industrial contracting businesses are
under pressure, but there is evidence of new project flows available in the new
calendar year, which will only impact on the Group"s performance from the 2005
financial year.
Middle East construction continues to command high working capital and the Group
has decided to build a provision against client payment risk in the region. In
Africa, construction remains high risk with long gestation periods
characterising project development and award. Payment and approval delays
continue to impact working capital and the Group will maintain its conservative
approach to profit recognition.
The upturn in the domestic and regional construction and building markets has
continued, supported by an improving interest and inflation rate regime and
increased government expenditure in the sector. This increased activity is
benefiting the Group"s supply and services companies.
The Group"s automotive and rolling stock operations are largely shielded from
currency volatility and are experiencing improved market demand. The global
demand for ISO tank containers has declined appreciably and the Group has been
forced to institute radical cost reduction measures in this sector to maintain
market leadership.
Murray & Roberts continues to pursue strategic partnerships to ensure value
creation through its underlying business. The sale of 50% of AWI South Africa
to Borbet of Germany has passed all regulatory hurdles and The UCW Partnership
with J&J Group was recently launched. The Bombela Consortium, in which the Group
holds a significant stake with local empowerment and international partners, has
submitted a comprehensive proposal for the Gautrain Rapid Rail Project.
The Group"s cash position remains strong and the operating margin is expected to
remain within the target band of 5,0% to 7,5%.
Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information.
